Local developer offers $9.5M for August Wilson Center

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The conservator for the August Wilson Center for African American Culture is juggling four competing bids for the Downtown property, including one by a local developer who wants to top it with a hotel.

In an interim report filed Thursday, conservator Judith Fitzgerald, a former bankruptcy judge, said the $9.5 million bid by the developer, who was not named, provides the best chance to continue the center's mission and viability.

The offer is the highest among the four Ms. Fitzgerald received for the property, which she is selling to pay off a delinquent $7 million mortgage and other debts.

Also bidding are the Pittsburgh Foundation, the Heinz Endowments and the Richard King Mellon Foundation, which together are offering $4 million for the $40 million center, while promising to continue its mission with the creation of a new nonprofit entity.

The two other bids also came from commercial enterprises, neither of which were named, that would purchase the building and liquor license for $4.5 million and $3.25 million, respectively. They would use the building for restaurants, bars, and entertainment venues, and perhaps add a garden roof, the report stated.

Ms. Fitzgerald said she intends to pursue the $9.5 million bid unless there are objections by Allegheny County Common Pleas Orphans' Court Judge Lawrence O'Toole, who is overseeing the case. He ultimately will decide who gets the building.

The offer for the building and liquor license would be enough to pay off the mortgage and many of the other debts, estimated at $10 million. The buyer also would enter into a long-term "license" agreement with the center that effectively would keep it intact and operating in the venue.

That would allow the center to continue its mission by removing facility costs and debt service obligations, and "restoring the path to financial viability," Ms. Fitzgerald stated.

Under the proposal, the center would retain gallery, office, and storage space free and get use of the theater for at least 120 days a year at a nominal fee, perhaps $1 per ticket sold. While Ms. Fitzgerald did not detail the type of commercial space that would top the building, it is believed to be a hotel.

In a press release, she maintained the offer should be attractive to the city, the county and the African-American community because the commercial aspects would "generously subsidize" the center and provide tax benefits for the governments.

"With community and civic support, this transaction would allow the center to keep its status as an independent nonprofit organization, housed in the iconic building, with substantially lower costs, enabling it to fulfill its mission," she stated.

Ms. Fitzgerald said the foundations' offer, for all intents and purposes, dissolves the August Wilson Center as an organization and proposes to form a new nonprofit entity "of an undefined mission, somehow related to African-American culture."

The new charity would have its own board of directors subject to oversight by the foundations to ensure it is running effectively and carrying out the mission. The foundations also would enter into an arrangement with the Pittsburgh Cultural Trust to operate the center.

Ms. Fitzgerald said the foundations, which have provided substantial support to the August Wilson Center in the past, have told her they will not do so in the future "under any circumstance."

However, in confirming last week that a bid had been submitted to buy the building and to preserve its mission, the Pittsburgh Foundation stated the consortium is separately "examining ways to maintain funding support for local African-American arts programming."

In her report, Ms. Fitzgerald said there does not appear to be a clear consensus among the various stakeholders, including the city and Allegheny County, over the best way to resolve the financial and social issues surrounding the center.

"Rather, there is a great deal of dissension, which I hope to quiet, over the appropriate use to be made of the facility going forward and how to solve this crisis," she wrote.

Regarding the bids, county Executive Rich Fitzgerald said Thursday night he doesn't back the $9.5 million one because it "in my mind, does not support the August Wilson mission."

The only one that "keeps the mission alive," he said, is that of the foundations. He argued that while the $9.5 million bid may be the highest of those offered, the total debt related to the center is more like $30 million considering all the funding provided in the past by the city, county, state, foundations and private corporations.

Given that, there is a clear need to ensure that the center's mission is preserved at all costs, Mr. Fitzgerald said. He saw the need for more discussion over the proposals, adding there may be a way for some of the bidders to work together to craft a better plan.

"To say we're going to pick one at this point, I think, is premature," he stressed.

Likewise, Kimberly Ellis, a niece of August Wilson, the Pulitzer Prize winning playwright who grew up in the Hill District, said that preserving his legacy and name is important in any decision to sell the building, which opened in 2009.

Ms. Ellis, who started a campaign to save the center, said she did not want to comment on any of the proposals because she does not know enough about them. However, she described the foundations' proposal as "viable," adding she does not have a problem with them dissolving the current organization and forming a new nonprofit as part of their bid.

For her part, Ms. Fitzgerald said she intends to meet with the various stakeholders, including the African American community, to get input on the bids. She said the sale to the local developer with the highest offer could end up falling through if public approvals regarding the real property involved are not obtained.

In addition, Dollar Bank, which moved to foreclose against the center last year after it defaulted on its mortgage, has the right, through a credit bid, to usurp any offer that isn't sufficient to pay the debt.

If such concerns cannot be resolved, the results could be a foreclosure or bank takeover, Ms. Fitzgerald said.

"In either event, no creditors will be paid and there is a strong possibility that the AWC will be closed and the organization dissolved," she wrote.

Mark Belko: mbelko@post-gazette.com or 412-263-1262, First Published April 17, 2014 5:38 PM

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